FOR OFFICIAL USE ONLY ASSESSMENT NOTE ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF US$5.0 MILLION FROM THE FOREST CARBON PARTNERSHIP FACILITY

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY ASSESSMENT NOTE ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF US$5.0 MILLION FROM THE FOREST CARBON PARTNERSHIP FACILITY TO THE REPUBLIC OF MADAGASCAR FOR Public Disclosure Authorized REDD+ READINESS PREPARATION SUPPORT MARCH 21, 2017 ENVIRONMENT & NATURAL RESOURCES GLOBAL PRACTICE AFRICA REGION This document is being made publicly available after Readiness Preparation Grant signature. This document may be updated as needed and the updated document will be made publicly available in accordance with the Bank s policy on Access to Information.

2 Republic Of Madagascar- GOVERNMENT FISCAL YEAR January 1 December 31 Currency 1 United States Dollar = 3282 Malagasy Ariary (MGA) ABBREVIATIONS AND ACRONYMS BNCR BNCCC CAS CIME CO2e CPF CSO DA DRAE DREEF DRPH ER ERPIN ESMF FCPF FGRM FM GCF GHG GIZ GOM IBRD IDA IFR ISN LAUREL M&E MEEF MRV MTR NDC NGO NRM REDD+ National Coordination Office/Bureau National de Coordination REDD+ National Climate Change Coordination Office/Bureau National de Coordination pour la Changement Climatique Country Assistance Strategy Inter-ministerial Committee of the Environment/Comité Interministériel de l Environnement Carbon dioxide equivalent Country Partnership Framework Civil Society Organizations Designated Account Regional Directorate for the Department of Agriculture and Livestock Regional Directorate for Environment, Ecology, and Forestry Regional Directorate of Aquatic Resources and Fisheries Emission Reduction Emission Reduction Program Idea Note Environmental and Social Management Framework Forest Carbon Partnership Facility Feedback, Grievance and Redress Mechanism Financial Management Green Climate Fund Greenhouse Gas Deutsche Gesellschaft für Internationale Zusammenarbeit (German Cooperation Agency) Government of Madagascar International Bank for Reconstruction and Development International Development Association Interim Unaudited Financial Report Interim Strategy Note Land Use Planning for Enhanced Resilience of Landscapes Project in Mozambique and Madagascar Monitoring and Evaluation Ministry of Environment, Ecology, and Forests Measurement, Reporting and Verification Mid-Term Report Nationally Declared Contribution Non-governmental organization Natural Resources Management i

3 ONE PA PADAP PC PF R-PP REDD+ REL RPF SCD SIS SESA SNAT UNFCCC WB WRI National Office of the Environment Protected Area Sustainable Landscape Management Project Participants Committee (of the FCPF) Process Framework Readiness Preparation Proposal Reducing emissions from deforestation and forest degradation, and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries National Reference Emission Level Resettlement Policy Framework Systematic Country Diagnostic Safeguards Information System Strategic Environmental and Social Assessment National Planning Scheme United Nations Framework Convention on Climate Change World Bank World Resources Institute ii

4 Country Director: Mark Lundell Practice Manager/ Senior GP Director: Benoit Bosquet/ Karin Kemper Team Leader: Benjamin Garnaud/ Erik Reed Project ID: P Expected Effectiveness Date: April 25, 2017 Lending Instrument: Carbon Offset Additional Funding Type: Scale-up ADDITIONAL FUNDING DATA SHEET. Madagascar REDD+ Readiness Preparation Support (P124655) AFRICA GEN07 Basic Information - Additional Funding (AF) Sectors: ENR Themes: Forestry, Climate Change Environmental category: B- Partial Assessment Expected Closing Date: June 30, 2020 Joint IFC: No Basic Information - Original Activities Project ID: P Environmental category: B- Partial Assessment Project Name: REDD+ Readiness Preparation Expected Closing Date: December 31, 2018 Support Joint Level: Lending Instrument: Carbon Offset Joint IFC: Fragility or Capacity Constraints [ X ] Financial Intermediary [ ] Series of Projects [ ] AF Project Financing Data [ ] Loan [ ] Credit [ X ] Grant [ ] Guarantee [ ] Other: Proposed terms: AF Financing Plan (US $m) Total Project Cost: Borrower: Total Bank Financing: IBRD IDA New Recommitted Others: FCPF Source Client Information Recipient: Republic of Madagascar Responsible Agency: Ministry of Environment, Ecology, and Forests Contact Person: Mamitiana Andriamanjato Telephone No.: +261(0) Fax No.: N/A coordonnateur.bncredd@gmail.com Total Amount (US $m) iii

5 AF Estimated Disbursements (Bank FY/US$m) FY Annual Cumulative Is approval of any policy waiver sought from the Board (or MD if RETF operation is RVP approved)? Has this been endorsed by Bank Management? (Only applies to Board approved operations) Does the project require any exception to Bank policy? Has this been approved by Bank Management? Team Composition Name Title Specialization Unit Erik Reed Environmental Specialist Team Lead GENDR Benjamin Garnaud Sr. Natural Resources Co-Team Lead GENDR Management Specialist Tracy Johns Carbon Finance Specialist Carbon Finance GENDR Maminiaina Rasamoelina Lova Niaina Ravaorimino Maharavo Ramarotahiantsoa Natural Resources Operations Officer Management Specialist Sr. Procurement Specialist Procurement Financial Management Specialist Financial Management [ ]Yes [X] No [ ]Yes [ ] No [ ]Yes [X] No [ ]Yes [X] No GENDR GGODR GGODR Andres Espejo Minan Carbon Finance Specialist Carbon GCCCFL Accounting Marie Roger Augustin Legal Analyst Country lawyer LEGAM Sachiko Morita Senior Counsel FCPF legal team LEGEN Paul-Jean Feno Peter Lafere Vohangitiana Josiane Rarivoson Mampionona Amboarasoa Vanessa Barrantes Sr. Environmental Specialist Sr. Social Development Specialist Team Assistant Operations Analyst (STC) Social Development Specialist (STC) Environmental Safeguards Social Safeguards Operational Support Operational and Technical Support Social Safeguards GENDR GSURR AFMMR GENDR GSURR iv

6 .... Practice Area (Lead) Environment & Natural Resources Contributing Practice Areas Climate Change CCSA Cross Cutting Topics [ X ] Climate Change [ X ] Fragile, Conflict & Violence [ ] Gender [ ] Jobs [ ] Public Private Partnership Institutional Data Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Co-benefits % Agriculture, fishing, and forestry Forestry Agriculture, fishing, and forestry General agriculture, fishing and forestry sector Total Mitigation Cobenefits % I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Environment and natural resources management Environment and natural resources management Environment and natural resources management Environment and natural resources management Environmental policies and institutions 30 Other environment and natural resources management 30 Climate change 20 Biodiversity 20 Total 100 Private Capital Mobilized No v

7 MADAGASCAR ADDITIONAL REDD+ READINESS PREPARATION SUPPORT FUNDING CONTENTS Data Sheet Activities Paper I. Introduction II. Background and Rationale for Additional Financing III. Proposed Changes IV. Appraisal Summary Annexes 1. Revised Results Framework 2. Financial Management and Procurement Assessments 3. Progress on REDD+ Readiness by R-PP component 4. Links Between REDD+ Readiness US$3.8 million, Additional Funding and ER Program and PADAP vi

8 I. Introduction 1. This additional funding grant from the Forest Carbon Partnership Facility (FCPF) in the amount of US$5 million to the Republic of Madagascar for Reducing Emissions from Deforestation and forest Degradation (REDD+) Readiness Preparation Support. 2. The Additional Funding for REDD+ Readiness builds on the REDD+ readiness activities already launched, consolidates and strengthens achievements and completes aspects of REDD+ readiness that have not yet been completed. The additional funding builds the enabling environment and puts in place the institutional, policy, technical and methodological building blocks for results-based finance at scale. This approach is embodied through World Bank-financed operations in Madagascar, including the Sustainable Landscape Management Project P154698/P (or PADAP) and the development of a REDD+ Emission Reduction Program that will result in tangible Greenhouse Gas (GHG) Emission Reductions (ERs). 3. The proposed Additional Funding activities are primarily technical assistance that will strengthen national REDD+ management arrangements, strengthen platforms for civil society engagement at the national and regional levels, reinforce regional and communal planning tools, improve private sector engagement, lay the foundations for the implementation of an ER Program, expand the Reference Emission Level (REL) to include mangrove and spiny forest ecoregions (analyzing socio-economic, political, and cultural drivers of deforestation and forest degradation), and support the continuing development of the national forest monitoring system and Measurement, Reporting and Verification (MRV) plan. II. Background and Rationale for Additional Funding in the amount of US$5 million. 4. When Madagascar prepared the Readiness Preparation Proposal (R-PP) in 2014, the total budget estimate for the REDD+ Readiness process was over US$7 million, and a grant of US$3.8 million (the original grant) was approved. A Mid-Term Review by the World Bank concluded that the grant was being implemented in a satisfactory manner, and a Mid-Term Report (MTR) was prepared and submitted by the Bureau National de Coordination REDD+ (BNCR) to the Forest Carbon Partnership Facility (FCPF) in June 2016 detailing specific progress made on REDD+ readiness in Madagascar, largely under the support of the US$3.8 million grant from the FCPF. The MTR also outlined the gaps that still need to be addressed in REDD+ readiness, justifying the need for additional funding. At the FCPF Participants Committee (PC) at its 22 nd meeting held in September 2016 in Accra, Ghana, the PC allocated additional funding of US$5 million to Madagascar for the REDD+ readiness process. The original grant has already disbursed 58 percent of the funds with 70 percent disbursement anticipated by the end of fiscal year 2017 and 100 percent committed. 5. Many REDD+ readiness activities were initiated with the US$3.8 million grant. Key results include a first draft of the National REDD+ strategy, an initial REL for the country for the Eastern Humid Forest Ecoregion and Emission Reduction Program Area, an advanced Strategic Environmental and Social Assessment (SESA) report and draft Environmental and Social Management Framework (ESMF) have been prepared and institutional arrangements for implementing REDD+ have been established including the multisector National REDD+ Platform 1

9 and two Regional REDD+ Platforms. Despite some challenges to access funds due to the uncertainty following the political crisis, the readiness process has progressed well. Through the support of both grants (US$3.8 million and additional funding of US$5 million), Madagascar will be able to submit its Readiness Package in During the implementation of the original grant, the PIU, which is part of the Ministry of Environment, Ecology and Forests, has gained experience in the fiduciary aspects of project management, such as contract management and handling multiple tasks. Coordination amongst institutions and stakeholders has also improved. The government has set up a website and is posting materials and minutes, all of which are part of a deliberate effort toward greater transparency and information sharing. 6. These activities also coincide with the preparation of a sustainable landscape management investment project (PADAP) that will focus on strengthening good governance in sustainable management of landscapes; reducing the degradation of natural resources; increasing income from productive sectors; and improving rural livelihoods. The REDD+ readiness grant and the landscape management project are also setting the stage for a proposed emission reduction program that will be submitted to the FCPF Carbon Fund. This proposed program will link performance based payments to the reduction of GHG emissions in the intervention zones of the PADAP supported by analytical work and institutional arrangements supported by the readiness funds. 7. The additional funding will be used to develop key aspects of Madagascar s capacity and institutions that are considered important for REDD+ within the overall objective of enabling Madagascar to be ready for the implementation of the REDD+ program at the national level. The FCPF is one of the few sources of funding for supporting readiness activities and the resources dedicated to these activities are a catalyst for future investments. Annex 3: Progress on REDD+ Readiness by R-PP component summarizes the progress and needs outlined in the MTR and Annex 4 provides a table of the activities carried out under the different grants and the synergies between the different investments. I. HIGHER LEVEL OBJECTIVES TO WHICH THE ACTIVITIES CONTRIBUTE 8. The project directly supports two of the five strategic axes of Madagascar s National Development Plan (Plan National de Développement, PND), namely: (i) inclusive growth and territorial anchoring of development (axis 3); and (ii) conserving natural capital and strengthening resilience to risks and catastrophes (axis 5). Axis 3 calls for different parts of society, sectors, and territories to work in synergy and achieve optimal use of natural resources and physical assets, taking into account key constraints such as land, skills, and technical instruments. Axis 5 focuses on developing strategies targeted to protecting natural capital, to reducing the negative effects of climate change and to strengthening the resilience of the populations and areas concerned. 9. The project will contribute to removing key constraints identified in the Systematic Country Diagnostic (SCD) and will be a key element of the new Country Partnership Framework (CPF). From the SCD, it is clear that rural growth and the management of natural capital are crucial for reducing extreme poverty and promoting inclusive growth. The draft CPF priorities include rural development, including enhancing management of natural resources, by improving the 2

10 mechanisms through which communities benefit from them, adopting a landscape approach that integrates mechanisms for better watershed and forest management, and strengthening the capacity for law enforcement. The additional funding contributes to enhancing the management of natural resources and designing transparent mechanisms that allow rural communities to benefit from carbon finance and, by so doing, directly contributes to the corporate goals of the World Bank Group twin goals of ending extreme poverty and boosting shared prosperity sustainably. 10. REDD+ readiness activities supported by this additional funding are further aligned with international commitments of Madagascar: the promotion of REDD+ is identified as one of the country s mitigation actions in their first Nationally Declared Contribution (NDC) submitted to the UNFCCC in 2016; REDD+ and related investments such as the PADAP project will support objectives set out in the Bonn Challenge to restore the world s deforested and degraded lands and contribute to Sustainable Development Goal target 15.3 on decreasing the proportion of land that is degraded over total land area. PROPOSED CHANGES 11. The proposed changes for the additional funding are: (i) modification of sub-components to address the aspects of REDD+ readiness that can now be addressed with additional resources, notably increasing support for sub-national level institutions, expanding analysis to cover the additional eco-regions of mangroves and spiny forest and developing a more robust forest monitoring system; (ii) addition of new activity indicators, and modification of the list of indicators in the results framework to capture additional outputs and outcomes in relation to REDD+ readiness; (iii) extending the closing date of REDD+ readiness activities; and (iv) clarifying that two safeguards policies that were to be determined (TBD) in the original grant (OP 4.09 on Pest Management and OP/BP 4.11 on Physical Cultural Resources) are now triggered. 3

11 Summary table of proposed changes Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ X ] No [ ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Activities Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ ] No [ X ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] Project Development Objective 12. The Project Development Objective remains unchanged: The development objective is improved institutional capacity and governance to design a national REDD+ strategy. Revision of the Results Framework 13. In addition to the 11 indicators identified in the US$3.8 million grant, three new indicators will be added, the core indicator of direct project beneficiaries is dropped as it is no longer mandatory and four indicators will be revised. The number of participants and beneficiaries will still be captured in training and consultation reports among others. The new indicators reflect aspects of improved institutional capacity and governance to design a national REDD+ strategy that were not addressed in the US$3.8 million grant but can now be addressed under additional funding. The indicators reflect certain key elements of the REDD+ readiness, although not all, and the modifications are summarized in the table below in the order of the components presented in the additional funding paper. A revised results framework is found in Annex 1. Indicators Original indicator Change Rationale for Change National REDD+ strategy to reduce emissions from deforestation and forest degradation (REDD+) is prepared and validated by national stakeholders (yes/no) (PDO Indicator) Continued 4

12 REDD+ M&E system functional according to defined criteria (yes/no) (PDO Indicator) Mechanism for tracking financial contributions to REDD+ strategy implementation in place (yes/no) (PDO Indicator) Direct project beneficiaries (% of which female) 50 (20) (PDO Indicator) Inter-Sectoral Steering Committee for REDD+ established Government institutions provided with capacity building support to improve management of forests Key studies conducted related to strategic options for addressing deforestation and degradation (3) Reforms in forest policy, legislation or other regulations supported Strategic Environmental and Social Assessment mechanism established (yes/no) Reference Emission Level (REL) for one ecoregion developed Feedback and grievance mechanism designed and operational for REDD+ (yes/no) Information system for co-benefit/safeguards established (yes/no) Revised- Measurement Reporting and Verification system for REDD+ is designed and operational (yes/no) Continued Dropped Continued Continued Revised targets Continued Revised- Strategic Environmental and Social Assessment undertaken and Environment and Social Management Framework (ESMF) is finalized and validated by relevant stakeholders The additional funding will allow the development of an MRV system in collaboration with BNCCC and WRI and this is a more relevant metric for REDD+ than a general M+E system. The indicator has been added to reflect activities that can now be addressed under additional funding. This highly technical capacity will enable the country to monitor and quantify the impact(s) of the REDD+ national strategy. This continues to be an important element of readiness identified by the GOM for coordination and effective implementation of the national REDD+ strategy The core indicators on direct project beneficiaries is no longer mandatory and has been dropped as it does not effectively relate to this type of technical assistance. The end-of-project target is being revised from 3 to 5 to include study on precious woods and mangroves The indicator is revised to reflect that a safeguard instrument, an ESMF, will be developed for the REDD+ process in addition to the SESA. The SESA is the strategic assessment of environmental and social risks and the ESMF defines what measures will be used to mitigate the risks. This is also consistent with international REDD+ readiness standards. Revised Targets The indicator has been revised from 1 to 3 to include mangroves, which will be a focus for the additional funding Revised New The indicator has been revised from being designed to being operational to reflect the capacity strengthening that can now be supported through the additional funding. The indicator has been added to reflect activities that can now be addressed under additional funding. This will enable the country to measure and quantify whether 5

13 the national REDD+ strategy is environmentally and socially sound as well as report on it to the UNFCCC. REDD+ registry is established (yes/no) New The indicator has been added to reflect activities that can now be addressed under additional funding and reflects an important aspect of tracking REDD+ transactions. Readiness Package prepared and finalized (yes/no) New The indicator has been added to reflect activities that can now be addressed under additional funding. The R-Package is a culmination of the different facets of readiness and while they were being addressed it was not anticipated at the outset of the original grant to be able to cover all of the elements of REDD+ readiness in-depth, but now can be supported and prepared through the additional funding. 6

14 Finance Expected Disbursements (in US$ million) (including all Sources of Financing) Fiscal Year Annual Cumulative Allocations - Additional Funding ( REDD+ Readiness Preparation Support) Source of Fund FCPF Currency US$ Category of Expenditure Goods, nonconsultants services, consultant services, training, workshops and Operating Costs. Allocation Disbursement % Proposed Proposed US$ Project Description 14. The structure of components is similar under the additional funding as under the US$3.8 million grant. The progress under each of the components is described below, along with a brief description of activities proposed. 15. Component 1: Institutional Arrangements for REDD+ Readiness Management (US$1.70 million). The operationalization and increased capacity of BNC REDD+, an agency within the government, is significant because REDD+ has been led primarily by NGOs in the environment sector, and is indicative of the Government of Madagascar s involvement in defining an integrated approach to development and conservation. A National REDD+ Platform and two regional REDD+ platforms have been set up through national legislation that include key members of sectoral ministries, regional officials most implicated in REDD+, civil society, NGOs and other important actors. They are providing key input on strategic aspects of REDD+ through working groups and generating ideas for broad based support for the REDD+ program. While the Council of Ministers is the highest level body for multi-sector decision-making within the government, more targeted institutional arrangements are set up to address REDD+ related interests. For example, coordination between the Ministry of Agriculture, the Ministry of Environment, Ecology, and Forests, and the Ministry of Water for PADAP, ER Program Idea Note (ERPIN) submission and ER Program development. The program is seeking to regularize a working group of Secretary Generals in key sectors to provide more operational coordination among sectors for REDD Stakeholders have been brought together, such as civil society members, women s groups, and private sector operators at various levels both at the national and more prominently at the regional level to provide input to the REDD+ design and identify opportunities for collaboration. These initial outreach efforts need to be reinforced and become more systematic to ensure efficient management and operation and to secure the commitment and participation of these stakeholder groups. REDD+ is increasingly acting as leverage for investments on development and 7

15 conservation 1 by exploring how specific investment opportunities such as sustainable agriculture might be able to contribute to, and benefit from, carbon finance. The readiness grant is being used as an opportunity to strengthen capacity for implementing an ER Program where the investments of PADAP will not cover all relevant communes, to seek synergies with GCF related investments and explore opportunities for development partners such as the Japanese and German bilateral development agencies, as well coordination in emerging areas of importance for carbon sequestration such in blue carbon investments in mangroves. 17. The activities proposed for additional funding include: Coordination at National level - Building capacity and ensuring the functioning of the national REDD+ platform; - Establishing and strengthening organizational capacity of BNCR and other relevant government institutions; - Strengthening fiduciary management of BNCR; - Developing a REDD+ funds management mechanism; Coordination at Regional level - Building capacity and ensuring the functioning of regional coordination platforms (regional Forestry Commissions) and improved inclusion of civil society; - Strengthening the capacity of decentralized services (including DREEF, DRAE, DRPH) to collect and analyze data, contribute to planning processes and to ensure adequate monitoring of program activities; - Building the capacity of decentralized local authorities (communes and regions), with a particular emphasis on preparing for REDD+ implementation; - Improving engagement with the private sector (e.g. business plan for agriculture opportunities in the ER Program area and elsewhere) - Strengthening capacity for engagement of women s associations; - Identification and support for the participation of vulnerable and/or marginalized groups; - Building capacity in planning and development of pilot projects. 18. Component 2: Development of National REDD+ Strategy including Consultations and SESA (US$2.0 million). An initial draft of the national REDD+ strategy, an advanced SESA and an ESMF have been prepared based on analytical work and a consultative process. The strategy will be updated with additional in-depth information and analysis and consultations as well as information gathered from the dry forest ecoregion (financed under original US$3.8 million grant), mangroves and spiny forest ecoregions using the additional funding. Further communication, information and consultation activities will be undertaken to ensure that stakeholders are informed and can engage in the design and implementation of the REDD+ program. Opportunities and 1 The Sustainable Landscape Management Program will invest around US$100 million (coming from the International Development Association, the Global Environmental Facility and the French Development Agency) during its initial 5 year phase. A big proportion of these funds will provide crucial investments in agriculture, agroforestry, watershed management and conservation in REDD+ high potential areas. 8

16 improvements will be sought in developing partnerships for future investments, such as private sector investments in sustainable community-based vanilla, cocoa and timber (among other commodities) activities, and working with potential investments in mangroves to improve sustainable biomass charcoal and construction wood production, fisheries habitats or others. Further activities related to land use have been identified as key to the integration of the REDD+ agenda in the longer-term local development visions. The implementation of these activities requires an amount of. 19. Activity 2.1: Enhancing the REDD+ Informational Base and Design and Elaboration of National REDD+ Strategy. Studies on the drivers of deforestation and forest degradation and political economy of deforestation and forest degradation undertaken in Eastern Humid Forest and Dry Forest Ecoregions under the original grant will be extended to the Spiny Forest and Mangrove Ecoregions under the additional funding. Studies contributing to the assessment of emission factors and political economy will also be extended. The evolution of the situation related to forest governance, particularly trade in illegal timber species have led to increasing synergies between REDD+ and Madagascar s engagement in the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The high profile nature of the challenge has increased the risks to the REDD+ program by calling into question the country s commitment to forest resource governance, but has also presented potential opportunities. The additional funding will thus support targeted analysis that could contribute to measures that can be implemented to improve management of precious woods. 20. The activities proposed for additional funding include (US$200,000): - Conducting studies on the drivers of deforestation in mangrove and spiny forest ecoregions, including political economy analysis; - Supporting elements of CITES action plan with regards to improving precious woods governance. 21. Activity 2.2: Consultations. A consultative process is being carried out as part of the development of the national strategy, for the SESA and ER Program development that were focused primarily on the areas where there are more tangible and imminent REDD+ implications, namely the ER Program implementation area. Further insight into the socio-economic, political, and cultural dynamics as well as local perspectives and priorities in the mangrove and spiny forest ecoregions will be sought to enhance the national REDD+ strategy. Additionally, activities will support building international recognition of the progress in Madagascar on REDD+ in order to create further investment and partnership opportunities. 22. The activities proposed for additional funding include (US$500,000): - Conducting consultations in mangrove and spiny forest ecoregions; - Information sharing about the REDD+ process and progress, with a focus on the ER- Program area; - Information sharing and consultations on the REDD+ strategy with relevant stakeholders, including publication and dissemination; - Events to enhance international awareness of Madagascar s REDD+ process; - Strengthening intersectoral policy dialogue; - Develop and operationalize a database on consultations. 9

17 23. Activity 2.3: Strategic Environmental and Social Assessment (SESA). The SESA, as well as associated safeguard instruments (such as the Environmental and Social Management Framework, Resettlement Policy Framework and a Process Framework) are being developed and consulted upon for the national REDD+ strategy, focused particularly on the humid and dry forest ecoregions. These assessments and instruments will be updated to include information relevant to mangrove and spiny forest ecoregions. 24. The activities proposed for additional funding include (US$100,000): - Collecting feedback and information and updating through a SESA process focused on the mangrove and spiny forest ecoregions; - Updating and/or modifying relevant environmental and social safeguard instruments for mangrove and spiny forest ecoregions; - Defining and setting up the institutional arrangements for the implementation and monitoring of safeguards instruments. 25. Activity 2.4: Preparation of REDD+ Implementation Framework including Feedback and Grievance Redress Mechanism. The original grant focused on initial conception of REDD+ implementation, including a feedback and grievance redress mechanism. Through the additional funding the implementation framework will be strengthened, with a particular focus on the potential implementation of the ER Program. Areas of emphasis will include defining a mechanism to manage pay-for-performance revenue streams from REDD+ with consideration of efficacy, transparency, traceability and equity in benefit sharing, and in financial disbursements. 26. The activities proposed for additional funding include (US$1.2 million): - Develop the funds management mechanism for REDD+ and other relevant pay-forperformance revenues; - Strengthen the policy framework for REDD+, notably by supporting the development of implementation provisions (textes d application in French) for the new Forest Strategy ; - Analyze options for benefit sharing mechanism(s); - Strengthen the feedback grievance and redress mechanism, particularly in the ER Program area, including building capacity of different agencies and institutions, communicating its purpose and how to use it to stakeholders and operationalizing the mechanism in practice; - Conduct a cost-benefit analysis of strategic options for addressing deforestation and forest degradation and identify priorities; - Develop an investment plan and strategy for REDD+ in Madagascar; - Support the operationalization of a REDD+ registry; - Support discussions around land use planning in targeted areas of the proposed emission reduction program; - Support decentralized technical services to more effectively implement REDD+ related projects and programs; 10

18 - Support capacity building of community groups and women s associations as well as any identified vulnerable or marginalized groups in target areas to participate in the REDD+ process. 27. Component 3: Development of a National Reference Level and Forest Monitoring System (US$1.30 million). A forest inventory was conducted by the general directorate for forests in the eastern humid forest ecoregion and is being launched for the dry forest ecoregion. This is the first time that such a broad undertaking has been carried out by the national agencies rather than being outsourced. An emphasis has been placed on building national capacity to analyze data rather than leaving it to independent contractors to carry out. Efforts are underway to increase public access to forest inventory data and results. The inventories and analysis increased coverage by including secondary forest classes, in addition to intact forests, which is relevant for broad swathes of the Malagasy landscape. The additional funding will focus on providing national coverage of the forest inventory, including for spiny forest and mangroves. A national forest inventory has not been conducted in Madagascar since 1996, so that future initiatives whether REDD+ related or not, can benefit from the data. For example, mangroves hold tremendous carbon sequestration potential as well as biodiversity, ecology and livelihood benefits and further analysis will be releveant for REDD+ but also other initiatives. The additional funding will also build local capacity including participation with local universities for analysis and monitoring so that relevant government institutions have the capacity to respond to multiple demands, increasing the opportunities for environmental monitoring and sustainability beyond REDD The activities will build an observatory for forest cover and land use that goes beyond carbon benefits and has a greater potential for sustainability through increased capacity to respond to demands from a diverse set of interested actors. The forest inventories are also of greater scope than anticipated at the outset of the REDD+ readiness process. In order to ensure the sustainability of the observatory, demand will be generated by linking it to other projects such as PADAP, LAUREL 2, and support of World Resource Institute for the Global Forest Watch in Madgascar among others. 29. Activity 3.1: National Reference Emission Level (REL). An initial version of the REL was set for the eastern humid forest, dry forest, mangrove and spiny forest ecoregions based on existing data. This version was submitted to the UNFCCC for its technical assessment. However, as part of the step-wise approach recognized under the UNFCCC, this REL will subsequently improve taking into account the results of the national forest inventory for dry forests which is underway. In order to further improve the REL, additional efforts will be required: a forest inventory for the remaining ecoregions (mangroves and spiny forests); up-scaling of the land cover mapping methods in the ER program area to the whole eastern humid forest ecoregion; and producing new land cover maps for the remaining ecoregions (dry forest, mangroves and spiny forests). The data collection will be conducted on a no-regret basis, meaning it will be carried out in a way that has applications beyond REDD+, in order to ensure that it feeds into other projects and processes as/if they develop. 2 Land use planning for enhanced landscape resilience (LAUREL) is a non-lending technical assistance that will support the GOM in developing decision-support tools that will allow an optimized land use planning. 11

19 30. The activities proposed for the additional funding include (US$700,000): - Conduct a forest inventory for the mangroves and spiny forests ecoregions - Up-scale the land cover mapping methods of the ER program area to the whole eastern humid forest ecoregion; - Produce land cover maps for the dry forest, mangroves and spiny forest ecoregions; - Establish an improved REL. 31. Activity 3.2: Development of a National Forest Monitoring System (NFMS). A national forest monitoring system and a safeguards information system have been conceived, although not fully operationalized. Capacity is being built to carry out monitoring and reporting in-house. The need remains to fully operationalize the system, notably on safeguards and co-benefits, to build capacity at regional levels to support monitoring and reporting, to enhance collaboration and synergy with other institutions and initiatives such as the forest information system being supported by World Resources Institute and the BNCCC, and projects such as PADAP and LAUREL. It is important that the NFMS prioritizes the generation of information to feed into governance (e.g. law enforcement, natural resource management) and policy making (e.g. land use management), while having the estimation of emission, biodiversity or other services as a secondary product. It is also important to ensure linkages between the administration and universities so that research feeds into the improvement of the NFMS. 32. The activities proposed for the additional funding include (US$550,000): - Monitor the national permanent plots and collect data to feed the NFMS; - Strengthen the geomatics laboratory (capacity building and equipment procurement) currently at BNCR and ensure that this is capitalized by other initiatives; - Operationalize the NFMS by producing new data and reporting it for information, governance and support decision making; - Provide support to research and development by local universities in order to improve the MRV functions of the NFMS; - Ensure publication and dissemination of status of activities and results from the NFMS or research/development; - Procure bandwidth dedicated to the online publication of NFMS data to improve the transparency of the system; - Develop a website dedicated to the online publication of NFMS data to improve the system s transparency; - Develop a land use information system in synergy with WRI and other projects. 33. Activity 3.3: Assessment and monitoring of REDD+ readiness. This activity will support operationalizing a system for monitoring progress toward REDD+ Readiness, in compliance with the guidelines and the monitoring framework developed by the FCPF. The submission of the MTR reflected initial reporting and ongoing financial reporting continues. An independent audit will be conducted and additional funding will continue to support these activities, including building capacity at sub-national levels. 12

20 34. The activities proposed for the additional funding include (US$50,000): - Procure equipment and software for regional offices supporting REDD+ coordination, General Direction of Forest, BNC-REDD+; - Develop relevant communication materials; - Organize specialized workshops and meetings on REDD+; - Conduct project and program evaluations including monitoring project activities; - Build the capacity of monitoring units at the regional level (data collection and processing). Table 1. REDD+ Readiness costs by component, estimated and actual (US$) Component in the proposed grant Component 1: Institutional Arrangements for REDD+ Readiness Management (Running costs of BNC-REDD+, support to regional institutions, support for national institutions) Component 2: Development of National REDD+ Strategy including Consultations and SESA Activity 2.1: Enhancing the REDD+ Informational Base and Design and Amount under original grant Additional Funding Total 900,000 1,700,000 2,600,000 1,750,000 2,000,000 3,750, ,00 200,000 1,000,000 elaboration of National REDD+ Strategy Activity 2.2: Consultations 250, , ,000 Activity 2.3: Strategic Environmental and Social Assessment (SESA). 450, , ,000 Component 2.4: Preparation of REDD+ Implementation Framework 250,000 1,200,000 1,450,000 including Feedback and Grievance Mechanism. Component 3: Development of National Reference Scenario and Monitoring System for REDD+ 1,150,000 1,300,000 2,450,000 Activity 3.1: Reference Emission Level (REL) 650, ,000 1,350,000 Activity 3.2: Development of a National Forest Monitoring System 400, , ,000 Activity 3.3: Assessment and monitoring of REDD+ readiness 100,000 50, ,000 Total 3,800,000 5,000,000 8,800,000 Implementation Schedule 35. The additional funding includes an extension of the activities, to June 30, 2020 to reflect the additional activities to be supported. It is worth noting that these resources will be used to lay the groundwork for preparing and submitting an emission reduction program to the Carbon Fund, expected in Q2 of FY18 and to prepare for its implementation. IV. Appraisal Summary 36. Technical Assessment. The activities supported by the additional funding are consistent with the technical assessment carried out under the US$3.8 million grant provided by the FCPF. The activities have been selected after technical discussions with BNCR and take into consideration the technical and financial needs of Madagascar s REDD+ Readiness process, the World Bank s comparative advantage, as well as support provided by other partners. The planning team clearly identified critical interfaces between components and proposed activities that are complementary and mutually enhancing while avoiding duplication. Careful coordination with 13

21 other donor activities, and an increased coordination related to new funding opportunities, such as with the Green Climate Fund, will be important. The activities identified under the US$3.8 million grant were selected in response to a country emerging from political instability. The additional funding activities reflect a process that has advanced considerably and which needs reinforcement to consolidate the gains for implementing REDD+ actions. 37. Financial Management. BNC-REDD+ will be responsible for the financial management of the proposed additional financing. A financial management assessment of the implementing agency was undertaken. The assessment was conducted in accordance with the OP10.00 and Financial Management Manual for World Bank-Financed Investment Operations of March 1, The objective of the financial management assessment was to determine whether the financial management arrangements (a) enable the correct and complete recording of all transactions and balances relating to the project; (b) facilitate the preparation of regular, accurate, reliable and timely financial statements; (c) safeguard the project s entity assets; and (d) are subject to auditing arrangements acceptable to the Bank. 39. The conclusion of the assessment is that the FM system is acceptable and meets the OP10.00 requirements. Nevertheless, (i) the contract of the FM consultant will be extended to this additional financing to support the FM team of the implementing unit; (ii) the accounting system will be upgraded to enhance reporting and incorporate requirements of disbursement following country system; (iii) an internal auditor will be hired on a contractual basis to support the effectiveness and the efficiency of the internal control system. The FM overall risk is Substantial, the project will have two field implementation support/supervision missions per annum. 40. More details on the financial assessment are provided in Annex Procurement. The assessment of the procurement capacity at BNCR revealed that there is a procurement unit which is headed by a procurement officer, civil servant, who has experience in procurement under the World Bank. A full time procurement specialist will be hired from the market to help address weaknesses and speed up procurement processes. The current procurement rating is Moderately Satisfactory and the procurement risk Substantial, Pursuant to Section VI, Paragraph 3 of the Procurement Directive; and Section III of the Procurement Procedure, and as per CPO s decision on Jan.30, 2017, procurement activities for the REDD+ Readiness grant will be carried out in accordance with the World Bank s "Guidelines: Procurement of Goods, Works and Non Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 and revised in July 2014 (Procurement Guidelines); "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 and revised in July 2014 (Consultant Guidelines). More details on the procurement assessment is provided in Annex Social and Environmental including Safeguards. The proposed additional funding will support activities that principally enhance technical capacity to analyze land use and forest cover, improve monitoring systems and strengthen institutional arrangements. The risks and impacts are 14

22 similar to the risks and impacts of the original grant. Therefore the same safeguards policies will be triggered and the instruments prepared will be adequate to manage the risks. 43. A Strategic Environmental and Social Assessment (SESA) is under advanced preparation through a consultative process to assess key environmental and social risks associated with the strategic options identified to address the key drivers of deforestation and forest degradation as part of the national REDD+ strategy, which also under preparation as a key product of REDD+ readiness. The SESA preparation has been launched under the original grant and a draft is expected at the end of February The additional funding will continue to support capacity building for local communities, women and other vulnerable groups to enhance active and informed participation in the REDD+ process. An Environmental and Social Management Framework (ESMF), Resettlement Action Plan (RAP), and Process Framework (PF) are also being developed to manage environmental and social risks and to mitigate potential adverse impacts related to future investments and carbon finance transactions in the context of the future implementation of REDD The institutional arrangements for assessing and managing environmental and social risks associated with the national REDD+ strategy include a multi-stakeholder, multi-sector national platform including a technical working group on safeguards, as well as regional (sub-national) REDD+ platforms. The BNCR has also hired technical assistants to coordinate the development of the safeguards instruments in a way that is aligned with and feeds into the national REDD+ strategy in order to ensure consistency and coherence between the two. The SESA and safeguard instruments are being developed through a consultative process carried out at the national, regional and local levels and drafts as well the final versions will be validated through a national workshop and consultation process. The proposed additional funding will continue to comply with World Bank safeguards policies regarding the management of environmental and social risks. 46. The original grant to support REDD+ readiness triggered four safeguard policies (Environmental Assessment OP/BP 4.01, Natural Habitats OP/BP 4.04, Forests OP/BP 4.36, Involuntary Resettlement OP/BP 4.12). Two others (Pest Management OP 4.09, Physical Cultural Resources OP/BP 4.11) were indicated as to be determined. 47. OP4.09 on Pest Management is now triggered. These activities, which essentially involve planning and technical assistance, will not involve any pest management activities. However, the SESA will address potential pest management needs in subsequent (post-project) REDD+ followup activities involving forestry plantations or agricultural intensification. Investments linked to REDD+, such as the PADAP project will undertake relevant safeguards assessments as needed. 48. OP/BP 4.11 on Physical Cultural Resources is also now triggered. These activities do not include civil works however there is a potential to affect physical cultural resources such as sacred forests through future REDD+ readiness investments. The ESMF will include chance find procedures for properly addressing physical cultural resources (including sacred forests, trees, and shrubs) in future REDD+ implementation activities in the event of a chance find. 15